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Former Apple CEO John Sculley on Steve Jobs, noble causes and creating the Pepsi Challenge

by Charlotte Mceleny
May 27, 2015

John Sculley was the CEO of Pepsi and Apple.

Veteran business leader talks about experience marketing

John Sculley, former Apple and Pepsi CEO, denies sacking Steve Jobs, relishes the moment Pepsi marketing surpassed Coca-Cola and said he believes established brands like McDonald's could never stand for a noble cause.

Speaking at the Socialbakers Engage conference in Prague last week and during an interview with Marketing, former Apple and Pepsi CEO John Sculley discussed his time at both businesses; pushed back against reports he’d sacked Steve Jobs in 1985; and promoted his new business, budget smartphone line Obi Mobile, which he describes as being founded with a "noble cause."

On creating the Pepsi challenge ...Most people don’t realize Pepsi was a regional brand, not nationwide. In markets throughout a large part of the Southwest, we were outsold 10 to one by Coca-Cola. We knew from a taste test that the two were comparable, so we created a campaign called the "Pepsi Challenge," which first launched in San Antonio, Texas

It was experience marketing, not product. We had a grandmother and granddaughter do the Pepsi challenge, which involved a card table and two cups. We had cameras on both; the grandma took two sips, then revealed what she had chosen to the granddaughter. "Grandma, you picked Pepsi!" said the granddaughter, and the grandma replied, "Never had a Pepsi in my life! I guess i like Pepsi better."

It had added authenticity; it was all about empowering consumers. What I have learned is that if you really want to build a multibillion-dollar company, you have to take advantage of the power shift. Mobile, cloud and data technology have caused a shift of power to consumers from incumbent companies. Consumers pay more attention to the opinion of other consumers.

It was my first real message that hit home: Marketing is all about stories. Someone described to me that when they had family and friends over and they would serve them a soft drink, if it was Coca-Cola they would take the bottle and pour in front of them — but they would pour Pepsi in the kitchen. I said, "We've got a problem; how do we get people to talk about it?" We didn’t have social, but we did believe in people sharing. We surpassed Coca-Cola by [shifting] to respect the opinion of the consumers.

On Apple and Steve Jobs …Steve [Jobs] was interested in experience marketing. [His vision was to] create a computer for non-techies that will be the greatest experience that anyone’s ever seen. He said, you’ve got to teach us how to do that. At that stage no one in high tech did marketing. It was really his vision: "Someday computers will be personal and advertised the same way cola was."

[Steve Jobs] had to step down from running Mac for being disruptive. He was never fired; he took a sabbatical and stood down as chairman of board. He was demoted but not pushed and was taken off Mac, and he never forgave me for that.

On having a "noble cause" ...I used to sit with Bill Gates and Steve Jobs, and they would be talking about having a noble cause and they had the same noble cause: to empower knowledge workers with productivity tools.

Bill and Steve, not either one ever talked about making money, they always started with a noble cause. The only difference is that Bill was all about software and Steve the reverse, he was about user experience for non-tech people.

It is hard to change the culture of a company that is large and established. Even though it is challenging to start a company, it is much easier to create a culture around a noble cause than it is to replicate it at a large, established company.

For example, look at McDonald's. It is the largest food service company in the world, but whether it can convince people it has a noble cause, I have no idea. Some businesses are just really hard to create a noble cause around. You could start a new food company that is all about nutrition and healthy living and wide access to a quality of food experience you’d never had before. That’s a noble cause.

It is very difficult to retrofit a noble cause; in fact you’d have to be very suspicious of someone who was retrofitting a noble cause to an established business that’s never had one before.

John Sculley has recently published a book called Moonshot, which is about the game-changing strategies he learned building billion-dollar businesses. He is also leading a team to build the first Apple-like, design-led mobile business that is affordable for developing markets called Obi. He believes that providing higher-end but affordable devices to developing markets will provide them with the connection needed to gain access to better funds and services, thus founding the business on a "noble cause."